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COI Finance Department: Lest we forget

November 18, 2013 Leave a comment

By PNG Echo

‘Cabal’ (Wikipedia) “… is a group of people united in some close design together, usually to promote their private views or interests… often by intrigue … The use of this term usually carries strong connotations of shadowy corners, back rooms and insidious influence.” 

Corruption: systemic, systematic and contrived

The findings of the Commission of Inquiry into the Finance Department (COI) stands, now, more than five-years-old, as a damning indictment of the inefficacy and lack of will of PNG’s criminal investigating agencies and those with the power to direct them.

Had the findings of this Inquiry been acted upon, PNG could have avoided up to seven additional years where large amounts of money remain unsatisfactorily accounted for. (Read: misappropriated – stolen).

It’s been described as a ‘cabal’: a high level conspiracy involving lawyers, public servants, banking officials, judicial officers, Members of Parliament (and, in a seeming continuation of the practices beyond the remit and time scope of the COI) even up to and including the current Prime Minister, all seemingly colluding to rob the coffers of the State of PNG – money that rightfully belongs to the people.

High Treason

The most shocking revelation of the COI is that the massive theft was perpetrated not just by outside lawyers and their clients, but facilitated by the very people who were paid and tasked with protecting the State’s interests in a breathtaking display of treachery, self-interest, venality and/or incompetency – (including, but not confined to) the Attorney General, the Solicitor General and the Secretary of Finance.

These trusted employees and representatives of the people of PNG callously and wilfully betrayed them.  Their crime, should it be proved, must surely be ‘high treason’.

The system exposed

An elaborate scheme had been put in place going back to the year 2000 to by-pass all checks and balances, enabling the payment of exorbitant and/or false claims – to the enrichment of everyone concerned in the cabal, who all got their cut.

It was so entrenched that it prevailed through various Secretaries of Finance, starting with Thaddeus Kambanei in 2000, his replacement Gabriel Yer and finally Stephen Gibson who inherited the system and, in some cases, increased the stakes and enhanced the unwritten and corrupt rules. Gabriel Yer, for unstance,not content
with his role as facilitator,  (with whatever riches that brought) launched his own claim from an incident involving a botched police raid that the COI suspected was bogus.

Officially, it was the job of the courts to determine the legitimacy of a claim and the Solicitor General’s job to defend the State’s interest in court but this system was constantly and consistently by passed.

…except for a very small number they [compensation awards against the State] comprise payment on liability incurred under default judgments or out of court settlement. (p12)

The State’s agencies ignored stated procedure, rules and even directives.

In evidence before the Commission current and past Secretaries of Finance, and former Attorneys General and Solicitors general have all acknowledged they were fully aware and conversant with the directions but incredibly, each stated that they were “mere policy” [original emphasis] statements that need not be followed. (p20)

Instead:

  • Late lodgments that should have rendered compensation claims unenforceable by law were entertained and paid out.
  • The Solicitor General’s Department, whose job it is to defend claims against the State in court, didn’t. Counsel for the defense failed to show up in most cases – and lost the case by default.
  • Nor did the Solicitor general follow up in court on the quantum.

Thus the Department of Finance acted as a de facto court, often making arbitrary decisions detrimental to the financial welfare of the State of PNG.

Whereas, the Finance Department’s only task was to find legally available funds in a ‘reasonable time’ to pay out adjudicated claims, in reality, their hand was constantly ‘in the cookie jar’ at their own pleasure.

The bastardized system had become normalized and deeply ingrained. Rorting of it was rife. Cooperating with this system was the bank that cleared and cashed compensation cheques immediately.

For the benefit of private lawyers

The Solicitor General’s Office and Department of Justice “failed to maintain its law office with adequate staff” according to the COI, This became the Departments’ excuse for failing in its duty to defend the interests of the state.

Yet there was always available money to brief private lawyers (the Departments in the period 2000-2006 exceeded the allotted budget by a whopping 10 million kina per annum in payments to outside private law practices, known as ‘brief outs’.)

Those sums [brief out fees] have provided a sure income for small law firms which have now grown on State business to 5 and 10 times the staffing of the Justice Department. (p34)

One of those private legal practices was that of Paul Paraka.

In a recent statement, a self-testament of good character, written subsequent (or a little prior) to his arrest, Paraka stated that his firm has 22 law offices nationally and that his firm “…prides itself in recruiting half of the Legal Training Institute pass-outs every year.”

Had the Department of Justice adequately staffed the department (the overspend of K10 million per annum would have been more than adequate) the state of PNG would not have been responsible for the unnecessary over enrichment of Paul Paraka Lawyers to its own detriment and, by association, the people of PNG.

Legally available funds and the Transfer Fund Suspense Account No 2

In 2000 and 2001 there were no allocations [by NEC] under the Appropriation Act for settlement of claims against the State.  However, the Secretary [Finance Department] illegally sourced well over K83 million to settie [sic] claims against the state… (p51)

…notwithstanding that NEC rulings have “…the force and authority of law.” (p18).

The establishment of a ‘slush fund’ helped him.

‘Trust Fund Suspense Account No 2′ was established illegally by the then Minister for Finance, Hon Andrew Kumbakor, after which the Secretary for Finance sought clearance from the Attorney General Mr Francis Danem – who cleared it.  Did he understand it to be illegal?  As the highest law officer in the land he ought to have.

The fund accrued monies to pay out the dubious claims when ‘legally available’ funds, weren’t.  It was kept topped up by monies sourced from unpresented cheques, cancelled cheques meant to be relodged in the original accounts, cancelled cheques that had been reissued (hence presented twice), refund cheques and other entries “…with no basis in accounting,” (p49).  This seriously skewed budgetary consideration for the departments and accounts where these cheques rightfully belonged.

At some stage, this account was revoked by the Minister in response to “…concerns about the way the trust was being used.” This notwithstanding, the cash book confirmed,  “…that the sum total of K130 million was paid out of the Account during the period 2002 to 2006 despite the ministerial assurance to the Auditor General that the Trust Deed was revoked.” (p56)

A law unto itself

The Finance Department had become a law unto itself answering to no one including and especially, the COI.

Senior officers of the Finance department have at all times been difficult even combative with the Commission. (p57)

Sam Koim of Task Force Sweep was prompted to ask an audience of AUSTRAC officers and bankers in Sydney (October 2012)…

… to imagine what would happen in Australia if your Department of Finance refused to answer to Parliament; if its members disbursed money without recourse to the national budget; if they colluded with each other and people outside the department to circumvent all controls, and misappropriated half of your government budget?

They would surely be prosecuted to the full extent of the law is the answer.  Corruption,on that level, once exposed, would never be tolerated in an Australian context.

Sadly: “Only in PNG.”

MCC not the only major Chinese enterprise on World Bank corruption blacklist

November 17, 2013 2 comments

The PNG government should be wary about its new open door policy towards Chinese companies and loans.

Two years ago Chinese state-owned corporation MCC, operator of the controversial Ramu nickel mine in Madang, was exposed as having been labelled corrupt and blacklisted by the World Bank and other international banks.

MCC is clearly not the sort of company you want pumping millions of tons of toxic mine waste into your pristine marine environments. It is a shame Michael Somare did not do a better job of due diligence before jumping into bed with these particular Chinese!

In April we exposed the criminal antecedents of the China Harbour Engineering Company in Bangladesh, Cayman Islands and Jamaica – but in June Powes Parkop gave the company a K300 million contract!

But it appears the rot in China runs much deeper as MCC and CHEC are far from the only Chinese enterprises blacklisted by the World Bank for corruption and other unsavory practices.

The list also includes:

  • ZHEJIANG ZHEDA INSIGMA GROUP CO. LTD. (INSIGMA GROUP)
  • ZHEJIANG ZHEDA INSIGMA TECHNOLOGY CO. LTD.
  • ZHONGKE LIFE SCIENCE & TECHNOLOGY CO., LTD.
  • HEFEI HIGHWAY & BRIDGE PROJECT CO. LTD
  • DAQING OILFIELD HIGHWAY & BRIDGE ENGINEERING CO., LTD.
  • CHINA COMMUNICATIONS CONSTRUCTION COMPANY LIMITED (as the successor or assign to China Road and Bridge Corporation)
  • CHINA GEO-ENGINEERING CORPORATION
  • CHINA STATE CONSTRUCTION ENGINEERING CORPORATION
  • CHINA WUYI CO. LTD

It is not only the World Bank that has bared these companies for fraud and corruption. The companies are also on the blacklists of the Asian Development Bank, European Bank for Reconstruction and Development, and Inter-American Development Bank.

PNG government beware!

Landholders beware!

AusAID adviser to ABG has financial links to Rio Tinto

November 15, 2013 1 comment

Ex-combatants on Bougainville have expressed their dissatisfaction with the Autonomous Bougainville Government, its leaders and advisors over the public consultation process on new Mining laws and re-opening the Panguna mine. Particular criticism has been made of Professor Ciaran O’Faircheallaigh, who ex-combatants perceive as acting in the interests of Rio Tinto.

The ex-combatants may have a point!

Professor Ciaran O’Faircheallaigh takes “substantial” amounts of money from Rio Tinto to conduct research – while at the same time advising landowners and the ABG on mine negotiations with Rio Tinto.

Is this a conflict of interest?

This was revealed on New Matilda earlier this year:

“O’Faircheallaigh’s appointment [as an ABG adviser] was trumpeted in an upbeat announcement on Griffith University’s website in September 2011:

“The last time the Bougainville Copper Mine was open, a civil war broke out in Papua New Guinea. This time help is at hand to re-open one of the world’s largest open-pit mines with the assistance of Griffith’s Department of Politics and Public Policy Professor Ciaran O’Faircheallaigh. Professor O’Faircheallaigh has twice been contracted through Coffey International [AusAID service provider] to examine mineral policy options and start preparations for negotiations.”

“Absent from this media release – pithily titled “Griffith academic negotiates a mine field” – is mention of O’Faircheallaigh’s close association with the research project at the epicentre of a recent controversy involving Marcia Langton and her Boyer Lectures… Along with Langton, O’Faircheallaigh is a chief investigator on the $480,000 study, which is part bankrolled by Santos ($45,000), Woodside ($30,000), and perhaps most controversially, given O’Faircheallaigh’s role on Bougainville, Rio Tinto (Rio’s support is for an undisclosed amount, but on the project’s website it is described as “substantial financial assistance”)”.

We don’t know how much AusAID is paying O’Faircheallaigh for assisting the ABG and landowners – he is contracted via Coffey International and they do not disclose the particulars of their AusAID deals – nevertheless, public disclosure information from Griffin University, suggests it must involve serious sums of money.

Project Date Amount (AUD) Source
Bougainville, Provision of Advice to the Autonomous Bougainville Government on the reopening of the Panguna mine. 2011-2013 ??????  
Provision of Advice to the Kimberley Land Council on LNG

Development in the Kimberley

2010 $226,976 http://www.griffith.edu.au/__data/assets/pdf_file/0003/351246/research-annual-report-2010.pdf
Liquefied Natural Gas precinct

– provision for advice-fee cap

Variation

2009 $ 147,500 http://www.griffith.edu.au/__data/assets/pdf_file/0016/172321/research-annual-report-2009.pdf
Regional LNF consultation -

responsible development

2008 $183,096 http://www.griffith.edu.au/__data/assets/pdf_file/0016/172105/research-annual-report-2008.pdf
Inpex (gas and oil company) Negotiations – Provision of Advice 2007 $154,750 http://www.griffith.edu.au/__data/assets/pdf_file/0015/124107/24042-gbc-research-report-v8-for-print.pdf

 

 

PNG’s media reeling from Government crackdown on dissent

November 14, 2013 4 comments

Source: Radio New Zealand

Papua New Guinea’s media are reeling from a crackdown by the Government as observers say media freedom is “non-existent”.

Three senior journalists were recently demoted by the national broadcaster, and a media adviser of the Sustainable Development Programme was deported last week.

As a major investigation into corruption from within the Government continues, the Prime Minister is leading a campaign to silence its critics.

Alex Perrottet reports:

In this year’s Reporters Without Borders media report, PNG has dropped six places in the rankings. This month, three editors and producers with decades of experience were told by NBC management they would be continuing in the archives section. It came after reports on the government take-over of the Ok Tedi mine, and on allegations the prime minister is implicated in the allegedly corrupt payments to the arrested lawyer Paul Paraka. The Chair of the Pacific Freedom Forum, Titi Gabi, says there has been strong pressure from the Government.

“TITI GABI: There is concern from individuals about what this means and where the industry might be heading because you know, managers have become the editors and it’s just quite silly, it’s quite dangerous.”

Titi Gabi says the pressure is not just on the national broadcaster.

“TITI GABI: This particular TV company has got instructions from the top, saying you can’t run anything on us that’s negative because if you do, you know, we’ll force you to sell your shares, we won’t renew your licence. So what you have is managers interfering with news – how ridiculous is that?”

The PNG media council has long been accused of inaction. A former editor of the Post Courier newspaper, Bob Howarth, says there’s a deafening silence, apart from social media sites and some brave journalists.

“BOB HOWARTH: It appears that the PNG Media Council has virtually collapsed and there are several looming threats to press freedom in terms of journalists being downgraded in the National Brodacasting Corporation.”

“The managing director of NBC, Memafu Kapera, declined to speak, but issued a press release saying the veteran broadcasters breached editorial policy and failed to follow instructions. But in an email, he would not say which reports undermined NBC’s reputation of fairness and impartiality. Of the three demoted, he writes: Two have fully understood the requirements of their new assignments and they are happy to take on the new responsibilities. They cannot run to the industry for protection using media freedom as a front.

Before his arrest, Paul Paraka had filed an injunction against the media for reporting on the allegations he had received massive payments from the Government. Police say they are now investigating people in high places in the Government, and since the arrest of Mr Paraka, the Government itself has issued directives on reporting.

Last week the media advisor for the Sustainable Development Programme, Mark Davis, was arrested by heavily armed police and deported to Australia with nothing but his passport, after criticising the Government for taking over the fund. The Prime Minister, Peter O’Neil, defended the move, saying Mr Davis’ had breached his work permit by playing politics. Mr Davis defended his role.”

“MARK DAVIS: Of course it’s going to have a political element. I write media releases for the chairman and the chief executive criticising the government, I write advertisements criticising the government’s actions and calling into question its behaviour, that’s my job.”

Social media sites have been campaigning for the PM to explain himself.

Former MP to evict thousands of Port Moresby residents for ‘K230m’ development

November 8, 2013 12 comments

Dr Kristian Lasslett*

Some of the Art Centre community’s littler residents. Image courtesy of Philippe Schneider.

Some of the Art Centre community’s younger residents. Image courtesy of Philippe Schneider.

Here we go again! This time it’s the 3,754 residents of Port Moresby’s Arts Centre community facing eviction. In Thursday’s Post-Courier the developer claims this ‘necessary’ step will pave the way for a “major development … worth more than K230 million”, which will “directly employ scores of Papua New Guineans and boost the country’s economy” (Post Courier 7/11/2013).

Sound familiar? It is almost identical to the argument used by developers to justify the now infamous Paga Hill forced eviction in 2012.

The Arts Centre ‘development’ is spearheaded by former parliamentarian, Tom Amaiu, and his company Macata Enterprises, which holds the state lease over this prime piece of land (portion 1564). Amaiu claims his ambitious plans are being frustrated by “illegal tenants who have unlawfully trespassed on his property” (Post Courier 7/11/2013).

Its not quite that simple. Here are three reasons why.

1. K100 for 12ha of prime Moresby real estate!!

According to Lands Department records, this 12.13 hectare plot of land, right behind parliament house is being leased to Macata Enterprises for the annual sum of K100. That’s not a typo! It would be difficult to find a room in one of Moresby’s less salubrious areas for that price per week, much less annually.

The sum seems especially curious given that 99 year business leases normally attract an annual rent which is pegged at 5% of the unimproved value of the land. Could a massive plot of land in the heart of Waigani really be worth K2000? Its unlikely – add three zeroes and the figure would be getting more accurate. If the Lands Department has granted Macata a rent exemption, then their lawful authority to do so must be made clear by the Lands Secretary; the Auditor General and Public Accounts Committee take such matters very seriously.

The LAGIS record for Portion 1564, note the total rent owing!

The LAGIS record for Portion 1564, note the total rent owing!

2. Tom Amaiu’s Criminal Past

The Arts Centre community allege that Amaiu has “gone into hiding” to circumvent legal proceedings. Amaiu rejects this claim, and argues he is a legitimate businessman being tarnished by “illegal settlers” (Post Courier 4/11/2013 & 7/11/2013). He may be, but he does have a questionable past.

While MP for Kompiam, PNG’s Supreme Court claims the honourable Mr Amaiu learnt of a K10,120 timber royalty payment being made to Wagop Korowai. Amaiu then “went to the bank to gain possession of some of the monies concerned — to which apparently he had no personal entitlement. He even went to the length of bringing an elderly man and his son from a primitive village area … [He then] falsely represented the two men to the bank official as being Wagop and his son”. Amaiu spent five years in prison for this crime during the 1980s.

3. The brutal tactics used to terrorise residents

The Arts Centre settlement is a vibrant, inter-ethnic community that has been at the site since the 1980s. Many children have grown to maturity there, and know no other home. Its residents can be found in all walks of life, working in both the service industry and government. Most just want their children to get a good education so they can one day live in some of those nice apartments just over the hill.

Sadly this dream has been seriously jeopardised by the way the development has been handled. In March this year, heavily armed police and bulldozers entered the community to carry out a forced eviction. Residents claim they were ordered by police to burn their own properties. One wonders what MPs thought as plumes of smoke wafted over parliament house.

One local, Anna wept as she told me about her sister’s home. It was destroyed during the demolition, while the sister was in hospital receiving chemotherapy. Now the family is homeless. This is just one story, there are many others like it.

Anna breaks down as she recounts her story.

Anna breaks down as she recounts her story.

Alternatives to Forced Eviction

Of course, there are ways to resolve this dispute amicably.

For instance, Macata Enterprises could publish its planning documents to illuminate a) how this mega-project is going to be financed to the tune of K230 million, b) the formal approvals given by government, c) proof the K230 million development meets zoning and planning requirements, and d) how the project plans to make good use of state land, that will benefit the public. Macata also needs to organise a resettlement package for current residents that offers a dignified alternative to forced displacement.

Amaiu claims he spent a whopping K2 million to fence off the Art Centre property. If only he had instead spent this implementing a humane resettlement plan.

The fence which Tom Amaiu claims cost K2 million

The fence which Tom Amaiu claims cost K2 million

Alternatively, if the residents successfully overturn Macata’s claim – with no financial resources its an uphill battle – then the state lease could be subdivided and reissued to residents, with Office of Urbanisation assistance. At the moment the state notionally receives K100 for this property, were the settlement upgraded it could easily bring in K200,000 from residents, which could pay for schools, hospitals and infrastructure.

However, all this demands political leadership. Like Dame Carol Kidu did for Paga Hill, the MP for Moresby North-East, Labi Amaiu, should be protecting his constituents’ rights to dignified and fair treatment. The only public utterance we have heard from the community’s MP was to deny involvement in his father’s business.

Oh did I forget to mention, Tom is Labi’s father.

No one is suggesting that the MP for North-East stands to gain directly from this deal, nonetheless his failure to act is lamentable. While the MP for Moresby South stood in front of guns and bulldozers at Paga Hill, Arts Centre residents allege the member for Moresby North-East did nothing as their homes were destroyed to pave the way for Amaiu Snr’s business deal.

Like so many other land disputes in PNG’s capital city this looks like it will be another bloody mess. Today (Friday) the National Court will hand down its decision on the resident’s appeal. If it fails, bulldozers and a violent rabble of police officers will descend on the community. It won’t be pretty.

Schooling at the Arts Centre community has been seriously disrupted by the dispute. Image courtesy of Philippe Schneider.

Schooling at the Arts Centre community has been seriously disrupted by the dispute. Image courtesy of Philippe Schneider.

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* Dr Kristian Lasslett is a Lecturer in Criminology at the University of Ulster and sits on the International State Crime Initiative’s Executive Board. He has been researching forced evictions in PNG since 2012.

Under The Umbrella: Tax Haven Cocktails

November 8, 2013 1 comment

Mike Seccombe | The Global Mail

Australia is cleaning up some of its own tax-avoiders, but for those with money to launder – especially from Papua New Guinea – it’s a nice place to wash up.

Australia is getting better at protecting its own revenue base from tax dodgers, but remains far too complacent about accepting investment from those who have dodged the taxes of other countries, according to a new report.

The 2013 update of the Financial Secrecy Index, compiled every two years by the international Tax Justice Network (TJN), finds that Australia still hosts “significant quantities of illicit funds from other jurisdictions”, notably from Papua New Guinea.

The secrecy index scores countries according to the openness of their financial systems as well as the amounts of dubious money flowing through them.

The “secrecy score” is compiled by assessing each country against 15 indicators, and the results are represented on a 100-point scale, on which a higher score represents greater secrecy, and a lower score greater transparency.

“Australia has been assessed with 47 secrecy points out of a potential 100, which places it in the lower mid-range of the secrecy scale,” the Australia section says.

Of 82 jurisdictions assessed by the group, Australia came in about half-way down, at number 44.

It remains a “tiny player” in the global scheme of things, says the report, because it accounts for less than 1 per cent of the global market for offshore financial services. Nonetheless, as we have reported before, wealthy Australians and Australian multinational companies are enthusiastic users of tax havens overseas. A survey earlier this year found the majority of Australia’s top 100 companies had subsidiaries in tax havens – in some cases, scores of them, as you can see in this interactive graphic.

“Australia has taken significant steps to address tax evasion and tax avoidance, especially as it relates to revenue loss from Australia,” the TJN report, released November 7, says.

The most notable of those steps, it says, was Project Wickenby, “the multi-agency taskforce … focused on tax evasion activities by Australians and Australian companies through secrecy jurisdictions. Indeed, it is seen as a model for other countries to follow in curbing tax evasion and tax avoidance.”

Not only had Project Wickenby raised over $1 billion in tax liabilities and collected over $563 million over five years to June 2011, the report notes, it had seen the flow of funds from Australia to various secrecy jurisdictions fall dramatically: by 80 per cent to Liechtenstein, 50 per cent to Vanuatu, and 22 per cent to Switzerland.

“Overall fund flows from Australia to 13 secrecy jurisdictions decreased by 22 per cent between the 2007- 2008 and 2010-2011 financial years, from $55 billion to $43 billion,” says the report.

Nonetheless, Australia continues to lose huge revenues to tax dodging; the report cited one estimate that in the period from 2005 to 2007, €1.1 billion was lost through profit shifting on trade with the European Union and USD1.5 billion through profit shifting on trade with the US.

The report noted, with approval, the changes to Australia’s general anti-avoidance rule made last year, by the Labor government, and also the passage of legislation that allowed the Tax Office to make public the tax liabilities of companies with revenues of more than $100 million, which it called “a small step towards greater tax transparency by transnational companies”.

So Australia is apparently getting better at protecting its own revenue base from tax avoiders.

But the report was critical of Australia’s performance when it came to co-operating with other countries trying to take on tax avoiders and evaders.

It stressed that PNG was a particular victim of “Australia’s role as a host for illicit finance”, and highlighted the accusation by the head of PNG’s anti-corruption body, Task Force Sweep, Sam Koim, that Australia has acted like the “Cayman Islands in relation to laundering and housing the proceeds of corruption from Papua New Guinea”.

In 2012, Mr Koim told officials of Australia’s major investigator of money laundering, the Australian Transaction Reports and Analysis Centre (AUSTRAC), that the Australian financial system was being used to systematically launder tens of millions and possibly hundreds of millions of kina.

Mr Koim complained, and the Tax Justice Network report reiterates, that Australian authorities have done very little to assist in providing intelligence about suspicious investments, particularly in real estate in North Queensland.

“[This is] an issue that has become increasingly pertinent as PNG investments in Australia have recently reached over $1 billion,” the report says.

“One reason for the failures [to make progress against widespread corruption in PNG] appears to be weaknesses in Australia’s anti-money laundering laws.

“In 2007 the Federal Government released draft legislation to extend anti-money laundering provisions to real estate agents in relation to the buying and selling of property, dealers in precious metals and stones, lawyers, accountants, notaries and company service providers.

“Yet this legislation was never implemented.”

Among the 15 criteria used by the network to compile its “secrecy index”, Australia was found inadequate in six and seriously wanting in another four.

These four most serious failures are that: Australia does not maintain company ownership details in official records; it does not require that company accounts be made available on the public record; it does not require country-by-country financial reporting by all companies; and it does not participate fully in Automatic Information Exchange.

And the man who prepared the Australian section of the report, Mark Zirnsak, director of the Justice & International Mission for the Uniting Church, fears the new Abbott government lacks commitment to the cause of tightening up on tax avoidance.

He cites the November 5 announcement that the new government intends to drastically water down so-called “thin capitalisation” rules that apply to companies operating here.

The previous government moved to reduce and cap the size of tax deductions available to big companies that use disproportionate amounts of debt to fund their Australian projects.

“Now it appears that instead of a blanket limit on the amount of interest and debt you can claim repayments on, they’re going to go for an approach of investigating each case,” says Zirnsak.

“I think that’s likely to be ineffective. It will be highly resource intensive to try to identify any examples of tax avoidance and to do anything about them.

“It is a worrying sign about how serious this government is about cracking down on corporate tax dodging within Australia, and it also sends a bad signal as to their will to investigate and crack down on companies that may be involved in tax evasion in developing countries in particular.

“I’m concerned that the political will to investigate tax dodging by Australian companies overseas is very low,” says Zirnsak.

Still, by comparison with many countries, Australia doesn’t look so bad.

Of the 82 jurisdictions assessed by the Tax Justice Network, the most egregious contributor to global tax avoidance is – no real surprise here – Switzerland.

It ranks top of the list, not because it has the most secretive financial regime – that dubious honour goes to Samoa – but because of a combination of great secrecy and great capital flows.

Some of the other jurisdictions in the top 10 are more surprising.

Luxembourg, which the network describes as “the dark horse of the offshore secrecy world”, comes in second.

“Offering a toxic cocktail of secrecy, tax loopholes and lax financial regulation, it is serviced by a huge offshore financial services industry and has recently been working with Switzerland to derail emerging European transparency initiatives,” the TJN says.

Hong Kong, the Cayman Islands, Singapore, the United States, Lebanon, Germany, Jersey and Japan round out the top 10.

The TJN finds some small improvement in the openness of some of the European countries since the publication of its last report, but not much, and also points to an eastward movement of the tax-avoidance centre of gravity – which it says has come about largely as a result of the greater wealth now concentrated in Asia.

“Some positive trends are evident,” says the TJN.

“With public tolerance for offshore financial secrecy having fallen sharply in many countries since our last index in 2011, we see potential for real political change: for example, citizens are demanding full disclosure in public registries of the beneficial owners that lie behind offshore shell companies, trusts … foundations and so on.”

However, despite increasing lip service paid to addressing the issue in western countries, particularly in the UK, it says, “little has been done so far to rein in the menagerie of offshore trusts, foundations, shell companies, loopholes and subterfuges that make up the global secrecy system.

“Rolling back the secrecy that shrouds up to $32 trillion in offshore financial assets remains one of the great challenges of the 21st century.”

Juffa criticizes Housing Corporation

November 7, 2013 1 comment

EMTV

Oro Governor, Gary Juffa has criticized the National Housing Corporation for eviction people without having alternate plans.

Governor Juffa said NHC has a record of carrying out evictions and then selling properties to foreign entities.

 

His criticisms come after the business arm of NHC, National Housing Estate Limited issued a warning to tenants of 5-mile, 3-mile and Saraga in the nation’s capital.

Making reference to the North Waigani Hostel eviction earlier this year, Governor Juffa accused the government for neglecting its people.

He said NHC, is a government institution that’s supposed to serve the interest of its people.

His view on the seven days’ notice issued to tenants in three NHC properties in NCD is that the government is unfair on Papua New Guineans.

The Governor made an appeal to the Housing Minister and NHE management to refrain from issuing eviction notices if they do not have a plan to address the ongoing housing problems.

He questioned why properties were sold to foreign entities and if the government was doing its duty in serving the interest of the people.

A former public servant, Governor Juffa is aware of the high rate of housing rentals in the city and the hardships faced by public servants in trying to find a roof over their head.

The state is preying on public servants who built PNG – They need our support!

November 6, 2013 13 comments

Dr Kristian Lasslett*

There is nothing worse than to meet a community, enjoy their hospitality, and then feel absolutely powerless as they are predated upon by some of the most venal and corrupt state institutions.

At the moment in Papua New Guinea hardworking public servants, many of who have devoted their life to service of country and community, are being tossed out of their homes and into the street by the National Housing Corporation (NHC) and their business arm the National Housing Estate Limited (NHEL).

Earlier this year I had the great privilege of meeting residents from the NHC flats in North Waigani. In February they were chased out of the place many had called home since 1997 by criminal gangs recruited by the NHC – K30,000 was released by the government for the thuggery. Those who resisted the eviction were bashed. So people wept and loaded what they could into cars and then set off into the heavy rain that pounded down that Saturday. The National Court later declared the eviction illegal.

This North Waigani resident was beaten by criminal gangs recruited by the government to evict residents.

This North Waigani resident was beaten by criminal gangs recruited by the government to evict residents.

A professional evaluation of the North Waigani property valued it at K40 million. The government sold it for K11 million. Why the state would sell a new, purpose built property when civil servants face a housing shortage is bizarre; why they would sell it at a massive discount is evidence in my view of something more malevolent.

Then last Monday it was revealed on EMTV that more civil servants are potentially facing forced evictions: “Tenants occupying 5-mile National Housing Corporation flat, 3-mile and Saraga, gathered yesterday to raise their concerns through the media. They have been given 7-days’ notice by the commercial arm of NHC, National Housing Estate Limited, to sign a new tenancy agreement, or vacate the property”.

I don’t know these particular communities, but I feel like I know them. I have sat around with numerous NHC residents facing forced evictions over the years, many are pioneers of this great country, its magistrates, its policy makers, its frontline staff, and they have many stories to tell – inspiring stories.

And yet lifelong public servants are being preyed upon by a rotten state institution. This is how the NHC was described by the Public Accounts Committee: “National Housing Corporation is a failed, insolvent and non performing entity – and has been for at least twenty years”. Citing Auditor General reporting, the Committee continues, the “controls and systems for the sale of properties has been abused for personal gain collaboration with outside interested parties”.

The NHC’s business arm, the NHEL, has a similarly chequered record. Indeed, its Executive Chairman John Dege – the current Acting head of the NHC –  watched on as North Waigani residents were brutally evicted.

NHC Managing Director John Dege at the North Waigani eviction.

NHC Managing Director John Dege, second from the left, at the North Waigani eviction.

As if this was not bad enough, soon after his appointment at NHEL Dege announced: “NHEL is…a major proponent in the Paga Hill housing development project undertaken by Paga Hill Development Company (PNG) Limited”. Some may recall, Paga Hill residents also endured a brutal forced eviction at the hands of the developer.

The developer, the Paga Hill Development Company (PHDC) and its executives, have between them been censured in no less than six official reports into corruption and public mismanagement in Papua New Guinea.

For instance PHDC’s Chairman and Director ran a company, CCS Anvil. The Auditor General’s Office claims when working for the Public Curators Office Anvil withheld “a significant amount of monies it has received from the proceeds of the realisation of assets of deceased estates, including sale of properties, shares and investment and rent…The AGO can find no evidence that any money realised by Anvil on behalf of estates has been paid into the Estate Trust Account”.

With all this information on the public record, NHEL still went into business with PHDC.

I am doing everything I can to bring the struggle of residents to light at an international level –  writing, speaking with NGOs, lobbying for a visit from Special Rapporteur on Housing. But more is needed, so much more is needed.

Unless an international coalition can form to take on this important issue of housing and human rights – which affects us all – then the PNG state will continue to act with impunity.

* Dr Kristian Lasslett is a Lecturer in Criminology at the University of Ulster and sits on the International State Crime Initiative’s Executive Board. He has been researching forced evictions in PNG since 2012.

PNG corruption taskforce claims to have uncovered massive fraud

October 25, 2013 12 comments

In Papua New Guinea, investigators say they’ve uncovered a racket involving lawyers, bureaucrats and politicians colluding to defraud the state of hundreds of millions of dollars.

Source: ABC Radio Australia

The claim comes after the principal of one of PNG’s biggest law firms was arrested over allegations he was paid by the Finance Department after submitting fraudulent legal bills.

Presenter: PNG correspondent Liam Fox

He’s the principal of Paul Paraka Lawyers, a law firm with 20 offices around the country and more than a thousand employees.

On Wednesday officers from the multi-agency corruption investigation Taskforce Sweep arrested him in a small village two hours drive from Port Moresby.

Mr Paraka was charged with 18 offences including conspiracy to defraud, stealing by false pretence and money laundering.

Taskforce Sweep alleges his law firm was paid around 30-million dollars by the Department of Finance last year after submitting fraudulent bills for legal work performed for the state.

It says the bills submitted by Paul Paraka Lawyers were for cases that were not briefed out to the firm and others that simply don’t exist.

During an address to his staff Mr Paraka said the charges are politically motivated and he’s innocent.

But Taskforce Sweep says it’s only getting started.

Its chairman Sam Koim alleges Paul Paraka Lawyers has been paid more than 100-million dollars by the Department of Finance since 2007.

In a statement Mr Koim says his investigators have uncovered a racket of lawyers, politicians, bureaucrats, court officials, financial institutions and media organisations all colluding to pillage public coffers.

He says many heads will roll as more suspects are identified.

The Finance Minister James Marape says the Taskforce’s investigation has shown how large sums of public money can be paid out without the Minister’s approval.

But it’s one thing to arrest someone and lay charges, another to convict him.

The wheels of justice turn pretty slowly in Papua New Guinea and it’ll be some time before Paul Paraka stands trial.

Top PNG lawyer Paul Paraka arrested over $28m

October 25, 2013 6 comments

Source: ROWAN CALLICK in THE AUSTRALIAN

PAUL Paraka, the richest, most powerful lawyer in Papua New Guinea, has been arrested in a dawn raid at a village near the capital Port Moresby over $28.7 million his firm is alleged to have received from the government’s Finance Department.

The principal of the country’s largest law firm, which has 22 branches, has been charged with 18 counts, including conspiracy to defraud, stealing by false pretence, money laundering and misappropriation.

The firm earlier filed a motion seeking a series of interlocutory injunctions to stop the government’s anti-corruption Taskforce Sweep from investigating it, and to stop police executing an arrest warrant on Mr Paraka.

The lawyer claimed, among other matters, that Taskforce Sweep was operating in an unconstitutional manner. The National Court initially granted a temporary restraining order over the warrant, but eventually rejected Mr Paraka’s application, and the Supreme Court, with Chief Justice Salamo Injia presiding, last Friday turned down the ensuing appeal.

Mr Paraka told reporters outside police fraud squad headquarters on Wednesday that he was innocent, would continue to fight all charges through the courts, and was simply being paid for government work.

Prime Minister Peter O’Neill said this week the government would not stand in the way of Taskforce Sweep, which targets administrative corruption.

An 811-page inquiry conducted for parliament three years ago by PNG judges Cathy Davani and Maurice Sheehan, originally from New Zealand, and prominent business leader Don Manoa, revealed a $300m scam perpetrated by top officials and leading lawyers.

But the report was injuncted at a court hearing in remote Alotau through the law firm of Mr Paraka, who is named throughout the document. Neither the parliament nor the two governments since then have pressed for its removal.

The report, as revealed exclusively in The Australian, lists a large number of bogus compensation claims made by and settled within the senior bureaucracy, with the involvement of private lawyers.

The Paraka scams – K780 million stolen from the people

Mr O’Neill said in May he had issued a directive that the government should “act swiftly” to pursue “massive payments in millions of kina made to law firms, companies and individuals for legal fees and out-of-court settlements” by the Department of Finance. “If I have to sack everyone including the tea boy at Finance, I will do so to clear the place up,” he said.

Attorney-General Kerenga Kua told a seminar last month lawyers were using their skills and education to rip off PNG.

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